Central Bank of the Republic of Turkey Narrows Overnight Interest Rate Corridor by 25 Basis Points

March 24, 2016

The 7.5% one-week repo rate and 7.5% overnight deposit rate were left unchanged, but the 10.75% overnight lending rate was cut to 10.5% at the latest meeting of Turkey’s Monetary Policy Committee.  At a few previous meetings, officials had delayed a promised simplification of their Byzantine rate structure, but now a small first step in that direction, which cuts the overnight rate band  by 25 basis points to 3.25 percentage points, has been made.  The action had to be “measured” according to a statement because “improvement in the underlying core inflation trend remains limited, necessitating the maintenance of a tight liquidity stance.”  Inflation fed by a weak currency remains close to 9% versus a medium-term target of 5% that is not projected to be reached for a couple more years. 

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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